We are, when you get right down to it, detectives looking for answers.
Markets present “fingerprints” when they trade and almost always leave valuable clues. Can you pick up on them is the question?
Every market is like a 13 year-old teenage girl; they’re gonna be as different as night is to day. So, what are we looking for in gold?
First up is how they go up and down during the day. Do they relentlessly climb/drop over time or is it more like spikes/drops that happen suddenly leaving you breathless?
During periods of low intra day volatility, you are much more likely to get spikes/drops that come out of nowhere, getting you to change your mind about market direction. Nothing gets you more bullish than a $5 - $7 price spike in 5 minutes: from there is where you lose money. Market drifts and then starts going lower taking out your stop.
I know these things because I live rent free in your head.
Second thing we ask is what do the “retracements” look like and what is their depth in price? When gold breaks back from a run up, what does a relatively normal retracement pattern look like?
And most importantly, what is the time pattern for the retracements?
Time patterns for gold are usually 8, 13, or 21 minutes in duration. After that, you are most likely to have lost the momentum of the move and it is finished [not always of course, but usually].
Price corrections are usually $3 - $5 in depth before the move up or down continues. Anything deeper than that and you usually have a problem maintaining the move.
If There Is food Around, He’ll Eat
When does patient bear eat? When he is patient.
Understanding time and depth of market will have you sitting at the proverbial picnic table feasting with patient bear.
Remember, Dick Tracy always gets his man.
Have a good day everyone!